Jebel Ali Free Zone FZE, a business park operator in Dubai, is cutting the price on a 2.2 billion-dirham ($599 million) Islamic loan by half as funding costs decline, according to three bankers familiar with the deal.
The interest rate on the loan for the company known as Jafza will be reduced to 150 basis points, or 1.5 percentage points, over the Emirates interbank offered rate from 300 basis points over the measure, the people said, asking not to be identified because the information is private. Jafza raised 4.4 billion dirhams from the eight-year amortizing loan in 2012 at a margin of 425 basis points over Eibor and has paid down half the facility, according to two of the people. The original margin on the loan was cut by 125 basis points last year.
Several Dubai companies have re-priced loans as banks flush with cash are eager to lend and the emirate’s economy rebounds. The three-month Eibor, the benchmark rate used by banks in the United Arab Emirates to price some loans, fell to 0.72 percent today, almost its lowest since at least September 2006 when Bloomberg began compiling the data.
DP World Ltd., the world’s third-biggest port operator, tripled the size of a credit facility to $3 billion and cut the margin on the five-year tranche of the deal, two people familiar with the matter said last month.
Abu Dhabi Islamic Bank PJSC, Citigroup Inc., Dubai Islamic Bank PJSC, Emirates NBD PJSC, Mashreqbank PSC, Samba Financial Group, Standard Chartered Plc and National Bank of Abu Dhabi PJSC provided Jafza the loan, according to the company’s 2012 bond prospectus.